Full-year price rise the first since 1990

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HOUSE prices are likely to end the year about 2 per cent higher than at the beginning of 1993. This will be the first year prices have risen since 1990.

The Halifax Building Society, Britain's largest mortgage lender with about 20 per cent of the market, recorded a rise in prices in November - 0.2 per cent.

The current annual house price change, according to the Halifax, is 1.5 per cent, but a sharp fall last December will drop out to give an overall rise of 2 per cent for the year. The Nationwide Building Society also reported its November figures yesterday. It saw a fall in prices during the month of 1.5 per cent, which cancelled out the rise of 1.5 per cent in the previous month.

Nationwide, the second-largest building society, says house prices are 2.3 per cent ahead of a year ago. It also expects house prices to be about 2 per cent ahead over the year.

Its chief executive, Tim Melville-Ross, said: 'As we have said before, some volatility in monthly house prices is to be expected, especially as the market remains patchy and subdued and buyers have not yet returned to the market in any force.'

Gary Marsh, housing economist at the Halifax, said: 'We said at the beginning of the year that there would be many ups and downs with a more consistent pattern of ups in the second half of the year. The signs are now there that house prices have stopped falling, and the rising trend should continue next year.'

He said the Budget, which put further restrictions on the tax relief on mortgages in place, was not likely to harm the recovery in house prices.

The prices paid by first-time buyers fell by 0.6 per cent in November, according to the Halifax, but the annual rate of house-price inflation for first-timers is 3.3 per cent - ahead of the general rise in prices.

First-time buyers paid an average of pounds 45,665, while all buyers paid an average of pounds 62,803.

Total lending for house-buying fell in October to pounds 1.9bn compared with pounds 2bn in September. The average over the previous five months was pounds 1.2bn, according to statistics compiled by the Bank of England.

Hamish McRae, page 37